Investors with an interest in Manufacturing - Electronics stocks have likely encountered both Emerson Electric (EMR) and Franklin Electric (FELE). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Emerson Electric has a Zacks Rank of #2 (Buy), while Franklin Electric has a Zacks Rank of #4 (Sell). This means that EMR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
EMR currently has a forward P/E ratio of 18.79, while FELE has a forward P/E of 22.92. We also note that EMR has a PEG ratio of 1.71. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FELE currently has a PEG ratio of 1.91.
Another notable valuation metric for EMR is its P/B ratio of 2.21. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FELE has a P/B of 3.61.
These are just a few of the metrics contributing to EMR's Value grade of B and FELE's Value grade of C.
EMR is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that EMR is likely the superior value option right now.
Free Report – 3 Stocks Sneaking Into Hydrogen Energy
Demand for clean hydrogen energy is projected to reach $500 billion by 2030 and grow 5-FOLD by 2050. No guarantees, but three companies are quietly getting the jump on their competition.
Zacks Investment Research is temporarily offering an urgent Special Report naming and explaining these emerging powerhouses primed to boom. Click below for Hydrogen Energy: 3 Industrial Giants to Ride the Next Renewable Energy Wave.
See Stocks Now >>Emerson Electric Co. (EMR) : Free Stock Analysis Report
Franklin Electric Co., Inc. (FELE) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
